The Fed—Steady as She Goes

Originally published in Stephen Dover’s LinkedIn Newsletter Global Market Perspectives. Follow Stephen Dover on LinkedIn where he posts his thoughts and comments as well as his Global Market Perspectives newsletter.

As was widely expected, the Federal Reserve (Fed) decided to leave the fed funds rate unchanged at its March 20 Federal Open Market Committee (FOMC) meeting, with members voting unanimously to maintain the target rate range at 5.25% to 5.50%.

Although there were no huge surprises coming out of the meeting, the subsequent statement and press conference from Fed Chair Jay Powell was interesting nonetheless, and may have provided hints at how the FOMC is thinking about future monetary policy changes. It was also a quarterly FOMC meeting, so the Fed’s updated “dot plot” (formally named The Summary of Economic Projections, or SEP) was released.

Despite the 2024 gross domestic product growth expectations rising to 2.1% from 1.4%, the unemployment rate still near historic 50-year lows and some recent data points showing inflation might be a bit stickier than expected, the Fed continues to believe that overall the case for easing monetary policy through cutting interest rates is still very much intact. In fact, the median dot still shows the central bank cutting rates three times by year end, with each cut done in the minimum increment of 25 basis points.

Fed Funds Rate_Median FOMC Projection